New Delhi: After reducing India’s exports to a trickle thanks to its 50% tariffs, the Trump administration has caught India’s celebrated IT/outsourcing industry unawares with a proposed bill aimed at levying a 25% tax on outsourcing workers abroad.
The “Halting International Relocation of Employment Act” (HIRE Act), proposed by Republican Senator Bernie Moreno in the US Senate last week, aims to discourage companies from outsourcing jobs to cheaper locations in India and other developing countries.
In a post on X, Senator Bernie accused corporates and politicians of shipping jobs overseas while local college grads struggled to make a living.
“Their days of ripping this country off are over—American companies have to hire American workers. Period,” he alleged, in another move designed to assert Donald Trump’s protectionist policies.
While college grads in America struggle to start careers, globalist politicians and C-Suite execs ship jobs good-paying overseas for cheap.
Their days of ripping this country off are over—American companies have to hire American workers. Period. https://t.co/qqVkibE8gc
— Bernie Moreno (@berniemoreno) September 5, 2025
According to the proposed Act, the Trump administration aims to set up a ‘Domestic Workforce Fund’ under the US Treasury which will be financed with the revenue collected from the outsourcing taxes, along with other related surcharges or penalties.
“It’s time to fight for working class Americans and ensure they can work and retire with dignity. If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks.” Senator Moreno added.
India’s $283 billion IT industry has been caught unawares of this development, especially as almost every US multinational has depended on relatively cheaper Indian (and other Asian) workers to cut costs and boost margins.
The industry currently employs more than 5 million people, according to India’s outsourcing trade association NASSCOM.
“The proposed HIRE Act would substantially diminish the financial benefits of outsourcing to India,” Rohit Jain, managing partner at law firm Singhania & Co, explained. “This could impact new contract acquisitions, affect profit margins, and compel Indian IT companies to seek growth opportunities in markets beyond the United States,” he added in an interview to a leading publication.
“Cost pressures may increase, particularly for basic IT services such as application development and maintenance, although advanced digital transformation and AI projects might remain less affected.”
“This crisis is man-made, with repercussions not only for Indian IT providers but also for US clients already grappling with rising costs from tariffs and visa restrictions,” Saurabh Gupta, president at HfS Research, added.
This legislation could also affect India’s role in the global supply chain, as many international corporations have based a large chunk of their R&D and other crucial business processes in India through GCCs set up in India. If the legislation is passed, the outsourcing tax will come into effect after 31 December 2025.
